The High Court has ordered James Street Hotel Limited to provide security for the costs of the defendants it is suing over its purchase and later sale of a Dublin 8 site. The court found that all defendants had a prima facie defence and that the company had not shown a high likelihood of success against any one of them that would justify an exception to the usual requirement for security.
Mr Justice Twomey delivered the judgment in the Commercial list on 6 October 2022. The application concerned security for costs under section 52 of the Companies Act 2014. The company accepted that it would be unable to pay the defendants’ costs if they won. The defendants’ costs were estimated at more than €3m, but the court did not determine the amount of security in this judgment.
The company is claiming €4,026,040.43 in damages arising from its purchase of a site on James Street for €7.2m and its later sale for €5.25m. It alleges that the vendors and their solicitors failed to disclose a challenge by neighbouring hostel Tathony House concerning the impact of the proposed hotel on daylight and an alleged right to light. The claim includes an allegation that replies to a property inquiry stating “Vendor says no” were negligent misstatements. These remain allegations; the court was not deciding the underlying claim.
The defendants argued that the company had already reviewed the planning file, which contained detailed objections about daylight, and had obtained specialist advice. They said that knowledge undermined the company’s claim that disclosure of a discontinued judicial review would have changed its decision to buy the site. The judge found this was an arguable defence, supported by evidence, and that it applied to all defendants. He stressed that this was an interlocutory assessment, before trial evidence, and not a decision on who would ultimately succeed.
The company also sought to avoid security on the basis that it was highly likely to win against at least one defendant. The judge concluded he could not find that any defendant was highly likely to lack the common defence, so the company could not rely on that special circumstance. He also rejected phasing security through the discovery stage, finding no compelling evidence that discovery would produce a decisive development.
The court left open whether security might be phased up to mediation. It directed the parties to try to agree outstanding matters, including the security arrangements, and to provide any agreed draft order to the Registrar. The judgment provisionally listed the case for mention one week later if further orders were needed.